Payment Industry in 2020: What Should Be Changed To Meet New Needs

Olga Shirimova
April 14, 2020
Payment industry in 2020 article featured image

Now, it’s too early to assess the toll the pandemic will take on the global economy. But it’s already clear that the world won’t get back to the status quo. Instead, many sectors will have to adapt to the new reality. Let’s see what the payment industry in 2020 can do to meet the emerging needs of people and businesses.

Due to the Covid-19 pandemic, many bank branches are closed, and some will never be reopened. Image source: USA Today

Payment Industry in 2020: Current Situation

The payment industry will play an important part in restarting the global economy after the lockdown. 

Speaking about the main challenges of this sector, we can expect a significant drop in all types of payments, including C2C and B2B transactions.

Naturally, some payment methods will be hit the hardest. First of all, the use of paper money and coins will inevitably decline. At the time of writing, many ATMs stay idle, as very few people withdraw cash.

Also, the volume of classic POS payments may decrease, with more customers spending money online. On the other hand, contactless payments will grow in popularity — not least because they are hygienic.

In this situation, payment operators and the decision-makers of the industry should adjust their services to the new challenges. Below are the basic components of a rescue plan.

With many industries affected, citizens and companies hope for monetary help from governments. Image source: CIO

#1: Supporting Customers

In hard times like these, banks and other payment providers should take urgent relief measures. It’s necessary to support people and businesses who have found themselves in dead-end situations. For instance, banks could temporarily cancel or lower transaction fees or defter payments. 

#2: Adapting To the New Reality

In the world where working from home becomes the new norm, payment providers must focus on security challenges. Also, they will have to re-configure their business to meet the needs of remote workers.

Today, many banks are not ready for the situation when people cannot reach an office or a cash machine. After the quarantine is over, financial institutions should develop digital solutions that would make the physical presence of a client unnecessary. It will be a big relief for remote customers — for instance, they won’t have to look for a bank outlet to sign a document. On the other hand, the availability of new options will promote remote work adoption.

#3: Payment Industry in 2020: Accepting New Rules

Below are the major shifts all payment operators and their clients should get ready for.

Cash can carry a virus and thus must be handled with care. Image source: EngNews24h

Living In Unmaterial World

The pandemic taught people to do without cash and other physical means of payment, and this trend will stay with us even after the disease leaves.

Also, we have found ways to survive without visiting banks and using ATMs. It’s very likely the new payment behaviors will take root in our lifestyle. Science tells us that it takes 21 days to develop a habit, and we have plenty of time now.

The shift to a cashless society will be difficult, considering many European countries heavily relied on it not long ago. 

Reaching Out To Everyone

When cash falls out of use, you probably won’t notice it, but many unbanked people will lose their only means of payment. Besides, we should always remember that not every person in the world has access to digital tools or knows how to use them properly. Some merchants, especially in rural areas, accept nothing but cash. Many senior citizens rely on paper money for everything and are not comfortable with electronic devices.

The challenge is to create financial instruments that would be both available to everyone and extremely easy to use.

Crypto regulation lack consistency, preventing digital money from wider adoption. 

Making Cryptocurrencies More Stable

Just a couple of months ago, Bitcoin represented a safe-haven asset and the demand for it was growing. Then its price plummeted because of the coronavirus panic, leaving many believers discouraged. Now stablecoins — digital versions of popular fiat currencies — are on the rise.

Cryptocurrencies is a very useful innovation, but they are highly volatile, especially when the market is feverish. To solve the problem, it’s essential to attract institutional investors to the sector. Currently, such investors are slow and cautious, because the crypto sphere lacks consistent and clear regulation. It’s necessary to develop rules that would be easy to understand and comply with. Then people will stop seeing cryptocurrencies as a purely speculation tool and start using it for their daily payments. The wider the adoption, the more stable is the price.

Contactless payments are getting popular as they are more hygienic and therefore safe. Image source: The Times

No Touching

The fear to catch a virus by touching an infected surface has shaped new habits and re-shaped old ones. Many shoppers have shifted to contactless payments — more hygienic and safe. Shop-assistants avoid touching customers’ cards because it has become dangerous. Some merchants are reluctant to take cash, asking us to use a contactless payment method instead. These new habits, together with regular hand-washing, will become a part of our new normal. 

Channels app combines a digital wallet with an encrypted messenger. 

Adding New Features To Digital Wallets

Expanding the functionality of digital wallets is another big trend. The wallet developers will be adding new features to enhance security and improve user experience. It can be biometrics, encryption, communication tools, you name it.

For instance, the wallet can be integrated with an e-shopping or e-coupon service, allowing the owner to take advantage of special offers and discounts retailers provide. 

Or, it can act as a channel for sharing news, promotions, announcements, and other important content. The news feed will reflect your behavior patterns and preferences.

Financial services providers could help relief funds and governmental programs reach out to people, including the unbanked. 

Competition + Cooperation

The crisis is likely to kill the financial projects that lack economic viability or focus on challenging and disrupting rather than on cooperation and win-win partnership. Cooperation will be another big idea in the post-pandemic world, where different societies will rely on each other for achieving local and global goals. This mindset will influence the fintech landscape of the nearest future. 

To begin with, payment tools providers may support money distribution programs by governments and aid organizations. The goal is to reach as many citizens and companies as possible using various payment methods. It is particularly important for the unbanked people who need help the most and cannot wait.

New Financial Regulation Approach

After the crisis, the regulators and financial service providers will have to develop a new model of collaboration, with a focus on innovations and a flexible approach. It will help to adapt to the post-pandemic reality and restore the economy.

Payment Industry in 2020: Conclusion

Right now, the biggest priority if every economy sector is saving people’s lives and health. But thinking ahead is also very important. Of course, many of these goals won’t be reached in a day, but it’s useful to have an updated road map to find the way out of the crisis.

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